Mumbai: The rupee on Tuesday lost 42 paise to 55.60 against the US dollar in early trade on the Interbank Foreign Exchange market, snapping three sessions of gains, weighed down by dollar's gains against the euro overseas.

Forex dealers said besides weakness in the euro against the dollar overseas on euro-zone worries, month-end demand for the American currency from importers also weighed on the rupee's value but a higher opening in equity markets capped the losses.

The rupee ended 20 paise higher at close at 55.18 against the US currency yesterday.

The domestic currency had gained as much as 82 paise to a dollar in the last three days, extending a turnaround of sentiment from last Thursday when the rupee was at its all-time weakest point at 56.38 to a dollar.

Meanwhile, the BSE benchmark index Sensex on Tuesday rose by 83.20 points, or 0.51 percent, to 16,500.04 in early trade.